"The Bharatiya Janata Party and its allies have authorized prime minister-designate Atal Behari Vajpayee to form a coordination committee to look into the issues of the alliance," party leader Jaswant Singh told a news conference.President K.R. Narayanan on Sunday invited the BJP to form the country's next government by March 19, ending two weeks of suspense after general elections returned a hung parliament.

On Monday, BJP supporters thronged outside Vajpayee's New Delhi home. They beat drums, lit firecrackers and threw colored powder in jubilation on Vajpayee's return to the premiership he held for only 13 days back in 1996.

The 71-year-old BJP leader's beaming face, framed in heavy floral garlands, wore a traditional red smear, or "tilak," on his forehead to symbolize the Hindu notion of spiritual accomplishment, as he waved to crowds celebrating his comeback.

India's financial markets hailed Vajpayee's appointment, which signaled the end of a power vacuum in New Delhi. The bellwether Bombay share index surged 1.92 percent to provisionally close 71.18 points higher at 3,787.68.

Meanwhile, India's Congress Party elected Sonia Gandhi its chairwoman, pinning its hopes once again on the Gandhi-Nehru dynasty and putting her in line for prime minister should a rival bid by Hindu nationalists fail.

The 224 Congress Party lawmakers in Parliament unanimously elected Gandhi as chairwoman, re-creating a post previously held only by her mother-in-law, Indira Gandhi.

"I feel overwhelmed by the confidence you have reposed in me," she said in her acceptance speech, which touched on many of the themes supporters wanted to hear.

"We have to go back to the grass roots to regain the confidence of the people - especially the women," she said.

She said the party must fight divisive forces - a clear reference to the Hindu nationalist rhetoric of the BJP, which is struggling to keep enough political allies to lead the government.

The Italian-born Gandhi, who married into what was once India's most powerful political family, becomes the first non-Indian to lead the Congress since India's independence from Britain a half-century ago.

As chairwoman, Sonia Gandhi is both its president - a post she took Saturday in a controversial move - and head of its parliamentary delegation, although she did not run for a parliamentary seat in the recent vote.

The party chairwomanship was created for Indira Gandhi after she lost a parliamentary race in 1977.

Between Sonia Gandhi's husband, Rajiv Gandhi; his mother, Indira Gandhi; and her father, Jawaharlal Nehru, the dynasty led India for 35 of its 50 years. Indira Gandhi was assassinated in 1984; Rajiv Gandhi in 1991.

Corruption scandals and party infighting helped drive the Congress Party from power in the 1990s.